THE 1031 EXCHANGE TERMINOLOGY

GLOSSARY OF BASIC 1031 AND OTHER TAX TERMINOLOGY

1031 Safe Harbor Regulations - The guidelines which property owners must follow in order to have a qualifying exchange under IRS Code Section 1031.

ACCOMMODATOR - SEE QUALIFIED INTERMEDIARY

Buyer - The person with cash (or the ability to obtain cash) who wants to acquire Exchanger’s property.

Deferred Exchange - Two closings wherein there will be a delay between the closing of the relinquished property and the subsequent closing of the replacement property. The delay may not exceed 180 days. Also referred to as a delayed exchange.

Exchanger - The owner of investment property who wishes to accomplish a 1031 Exchange. Also referred to as Investor or Taxpayer.

Move-down 1031 Exchange - An exchange (deferred or simultaneous) whereby the investor exchanges down to a replacement property the cost of which is less than the net selling price of the relinquished property.

Move-up 1031 Exchange - An exchange (deferred or simultaneous) whereby the investor exchanges up to a replacement property the cost of which is equal to or greater than the net selling price of the relinquished property.

Qualified Intermediary - The third party entity that handles the exchange. Also known as the Accommodator. An escrow company for exchanges.

Relinquished Property - A property owned by the investor, which he wishes to sell via a 1031 Exchange.

Replacement Property - The new property that an investor wishes to acquire via the 1031 Exchange.

Seller - The owner of the replacement property that the taxpayer wishes to acquire via the 1031 Exchange.

Simultaneous Exchange - Two closings, which occur at or about the same time and often at the same place.